Inside Amazon India

The Seattle based ecommerce company
which was founded in
1994 came in India in
2013.
The global E-comm leader entered our market when
homegrown players like Flipkart & Snapdeal had already
set up shop. Most pundits said that Amazon would have
to start from scratch however; Amazon has fared well by
effectively using the cards they had been dealt with. Let’s
check out some actions which helped Amazon in its
journey in India to surpass the local competition.
The Base Was Set

Before Amazon’s arrival, the E-commerce market was estimated to be
around 5-6 Billion dollars, including travel bookings and online
shopping. Companies like Flipkart, Myntra & so on created a niche for
themselves with their amazing ad campaigns, and geared the Indian
consumer to shop online. Amazon poured in heavy investment to its
advantage. They targeted tier 2 & 3 cities as the metro cities were
already aware of the benefits of online shopping. Amazon put efforts
in building a brand name and educating sellers before starting its
operations.
Worn Competition Out
By the time amazon entered the Indian
market, the local players has a good
few years run. They were ahead in the
game, but also burnt a lot of cash in
customer acquisition through discounts
& marketing. Most of the smaller
ecommerce companies were either
acquired or shut down shop.
Industry leader Flipkart which successfully managed to get funding, was
forced to keep burning cash to keep the discounts running. The amount
of losses was more or less affecting the profit gained from the sales.
Companies like Snapdeal had to lay off lots of employees. The major
target for home players revolves around getting more funding and
keeping the burn rate to a minimum.
Third party market place
The laws in India made Amazon
work with sellers in India and
provide them a platform to conduct
business. Amazon couldn’t sell
directly to customers like they does
in the USA.
They revamped their entire ecosystem to work in conjunction with the millions
of small sellers. Instead of posing as a threat, they gave them a business
opportunity. Amazon recruited a vast number of suppliers and educated them
to sell on Amazon India. They helped the sellers in creating a catalogue of
their products. They then acted as a third party market place with solid
logistics to lower running costs. Currently all major ecommerce players like
Flipkart & Jabong use the marketplace model, where they connect sellers
with buyers. A third party marketplace model lowers costs efficiently than
direct selling.
Understanding The Indian Shopper
Shopping online in India with
cash-on-delivery (COD) is
preferred by over 50% of
shoppers. Most Indian
Consumers are still
comfortable with COD rather
than paying online.

Home Grown E-commerce players have therefore Relied on tactics like
COD payments, liberal return policies, free or subsidized shipping and inhouse logistics and more importantly vast discounts. For a company like
Amazon with over 50 billion dollars in revenue, letting the Indian E-comm
players burn their resources in advertising and promotion and exclusive
discounts would have been the safest bet. But nonetheless they were
confident about entering the huge Indian market and incorporated some of
the tactics used by Indian players.
Flipkart’s big billions day and Amazons Great Indian Festival went toe to
toe recently. With Flipkart Crossing the Rs. 1000 Crore mark in its first day
of the sale. The amount of discounts given to the consumers would have
definitely resulted in a sales fatigue. Amazon with their deeper pockets
normally offers more than the competition in the form of Amazon
Cashback on payments made through Amazon Pay. Amazon has been a
pioneer in affiliate marketing. They have partnered with websites like
xerve.in & Cashkaro.com and many more to boost sale. Shopping on
these partner websites further gives additional cashback and helps
shoppers save money on their spending.
The more offerings and better service a website has, the
better the loyalty. Amazon has created a niche for itself in a
short time with some amazing customer service and great
catalogue of products.
Currently the Indian market is big enough to accommodate
multiple players. A few more years will tell us who would be
crowned the ultimate king of the online marketplace in
India.